On Energy Imports, Bahlil: If Necessary, Don't Use the Dollar

Energy and Mineral Resources Minister Bahlil Lahadalia stated that the government is striving to reduce dependence on energy imports, particularly LPG, which has been draining a large amount of foreign exchange. Bahlil said that in addition to increasing domestic production, his ministry is also exploring the option of conducting import transactions without using the US dollar. The high demand for foreign exchange to fund energy imports impacts the rupiah exchange rate. “Therefore, going forward, I want us to reduce these imports if possible. We should utilise our domestic production, and if we must import, if necessary, let’s not use the dollar. Whichever country we can buy from without using the dollar, that is far better,” Bahlil said at the CNBC Indonesia Energy Forum in Jakarta on Thursday. He detailed that national LPG consumption has now reached approximately 8.5 million tonnes per year. However, domestic production is only around 1.8 to 1.9 million tonnes, meaning about 75-80% of demand must still be met through imports. LPG imports are one of the largest contributors to foreign exchange outflows. When the reference price was still based on Saudi Aramco with the Indonesian Crude Price at around US$70 per barrel, the foreign exchange spent on LPG imports reached approximately Rp120 trillion per year. However, following changes to the price reference due to geopolitical tensions in the Middle East, including conflicts affecting Saudi Aramco facilities, the import value is expected to increase. “With the ICP as it is now, I imagine our foreign exchange outflow for managing LPG is no less than Rp140 to Rp150 trillion. And our total annual spending on fuel is approximately US$28 to US$30 billion,” Bahlil said.